Abstract
Financial remittances facilitate human capital formation by improving access to education andhealth; an increase in investments and reduction in poverty especially for recipient households. Also, remittancesserve as a critical source of foreign exchange for the national accounts and they promote macroeconomic stability. It has been estimated that remittances are now more than double the size of net official flows, and are second toForeign Direct Investment (FDI) as source of external finance for developing countries. To derive maximum benefitsand forestall the misuse of remittance channels for the purposes of concealing the proceeds of crime, it is crucial toadopt and enforce effective anti-money laundering and counter financing of terrorism measures of acceptableinternational standards. This paper examines the importance of payments and foreign remittances systems; anddrawing lessons from the mutual evaluation of countries in West Africa, concludes that effective and efficientcompliance can only be achieved with a strong commitment of the industry to enforce self regulation. Other measuresto enhance the efficiency of the payments and remittances systems are also recommended.
Highlights
Remittances have become a major source of external development finance and, contribute in many cases to economic development
The World Bank (2013) estimated officially recorded remittance flows to developing countries to have reached about US$402 billion in 2012 growing by 5.3% compared to the previous year and remittance are estimated to further grow by 8.8% annually during 2013-2015 to reach about $515 billion in 2015
Remittance service providers (RSPs) and other designated nonfinancial businesses and professionals (DNFBPs) are required to undertake customer due diligence to ascertain the true identity of a customer - be it a politically exposed person or otherwise
Summary
Remittances have become a major source of external development finance and, contribute in many cases to economic development. It has been estimated that remittances are more than double the size of net official flows, and are second to Foreign Direct Investment (FDI) as source of external finance for developing countries (Ratha, 2003). It should be noted that the slowdown of remittances to ECOWAS countries in 2009 – 2010 was a worldwide phenomenon due to (a) the economic slowdown in the high-income OECD destination countries including the USA and Western Europe which account for almost twothird of remittance flow to developing countries, (b) impact of the financial crisis, (c) uncertainty about exchange rate and (d) impact of a fall in oil prices in South Asia, Middle East and North Africa and On developing countries(see table 1 below for detail breakdown and source of data). A brief discussion on the FATF Standards and their implementation in the subsequent sections of paper will explain the usefulness of the standards in promoting better payments and remittances systems
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